Any founder in the D2C space has likely wondered: What’s the perfect balance between online and offline presence? Should a brand focus entirely on D2C, or explore marketplaces and quick commerce as well? These are critical questions for growing D2C brands, and in this blog, we dive into these topics with insights from Bharati Balakrishnan, Country Head & Director of Shopify India, in conversation with Rahul Kothari, COO of Razorpay at the D2C & Retail Summit ’24.
As a platform that powers countless D2C brands globally, Shopify has a deep understanding of the challenges and opportunities in balancing online and offline strategies. Here, we uncover three crucial insights from their discussion that can offer valuable guidance for D2C founders aiming to refine their online retail strategies and drive growth.
What is the Perfect Balance Between Online and Offline Presence for a D2C Business?
To discover the ideal balance between online and offline channels, it’s crucial to follow where your customers lead you, emphasized Bharati Balakrishnan. She said that this mix largely depends on your business category and target audience. Today, a website acts as a vital hub connecting all your sales channels, a role that has become even more pronounced due to COVID-19. While customers may complete their purchase in a physical store or on a marketplace, the website remains essential for discovery and initial engagement.
For instance, many FMCG brands turn to Shopify to connect directly with their customers, as they are often constrained by traditional general trade channels that limit direct engagement. This direct-to-consumer approach not only provides valuable first-party data but also allows for detailed regional analysis, driving more informed and effective marketing strategies.
Today, the role of online presence for D2C brands is crucial. It serves as your billboard, a platform for experimentation and innovation, a channel for direct communication, and a source of valuable data. – Bharati Balakrishnan, Country Head & Director of Shopify India
Why Aren’t More Indian D2C Brands Making Waves Globally?
Why do we see fewer D2C-only brands emerging from India, and why haven’t we seen the rise of massive Indian brands that can compete on the global stage like their counterparts in China? The answer often boils down to margin economics, Bharati said.
In India, building a successful D2C brand involves navigating complex challenges such as achieving a high average order value, managing performance marketing costs, and covering logistics and operations expenses. In contrast, established retail concepts like big box stores in North America have long set the bar high with margins that support scalability. In the US, for instance, brands typically need to sell at a multiple of their cost of goods sold to thrive in big box retail. India is still in the early stages of this journey.
As we continue to premium-ize various categories, this landscape will evolve. The key question for many Indian brands is: Are they aiming to build a global brand for the Indian diaspora or a truly global brand? While catering to the Indian diaspora is a viable market, it’s relatively smaller compared to a broader global audience.
However, is this more about the focus of Indian brands, or does it also come down to economic factors? With the right positioning, Indian brands can certainly turn the economics in their favor, Bharati said. Consider how fashion from Italy is synonymous with style—what can Indian brands offer that leverages their unique strengths? Where can India carve out a competitive edge on the global stage?
Finding the right positioning and tapping into what makes Indian brands unique could be the game-changer needed for global success.
Fashion from Italy is synonymous with style—what unique strengths can Indian brands bring to the table? Where can India carve out its competitive edge on the global stage? This is what Indian brands need to consider. – Bharati Balakrishnan, Country Head & Director of Shopify India
Should D2C Brands Tackle Fulfilment Challenges Across Multiple Platforms?
Bharati Balakrishnan pointed out that Shopify’s decision to divest from its fulfillment business in the US highlights a pressing question for today’s brands: Should D2C companies handle their fulfillment, especially when operating across multiple platforms like D2C, marketplaces, and quick commerce?
In a landscape where products might be delivered to customers in as little as 10 minutes through quick commerce, the challenge isn’t technological—it’s about where your inventory is managed. With numerous delivery points and warehouses, can your brand genuinely meet the promise of rapid delivery? Do you want to invest so much to meet the promise of 10 minutes? Even if logistics companies offer such fast fulfillment, is it practical or beneficial for your brand to make this commitment? These are critical questions that need thoughtful consideration as you plan your fulfillment strategy.
Be hands-on with your Shopify store. With AI, you have a unique opportunity to build businesses that are truly efficient and scale revenues without proportionately increasing costs. – Bharati Balakrishnan, Country Head & Director of Shopify India
To Sum Up…
In navigating the dynamic world of D2C, finding the right balance between online and offline channels, tackling global market challenges, and addressing fulfillment complexities are pivotal for success. Insights from Bharati Balakrishnan shed light on these crucial aspects, emphasising the need for D2C brands to stay agile and innovative. By understanding customer needs, leveraging unique strengths, and embracing technology, brands can position themselves effectively for growth and impact. As the landscape continues to evolve, these strategies will help guide D2C founders towards achieving their vision and thriving in an increasingly competitive market.
